This Internet Blog attempts to exhibit the most meaningful Sentiment Indicators that we believe affect the performance of the market in different time frames; most are Contrarian extremes suggesting that the majority has adopted a certain trend fully at the point at which it is about to reverse. Included are also comments about the Indicators and any other facts or ideas that are pertinent to market action. To Post comments, just click on "comments" and write away.

Monday, March 8, 2010

In this week's Barron's the Other Voices column is a startling article about HFT, or High Frequency Trading, which now comprises 73% of the equities markets - how can one be a Contrarian to computers that scalp split-second anomalies by algorithms, presenting such a danger to investors, as in 2007, when they jointly pulled the liquidity, unlike Specialists that make "orderly markets"?

I used to liken investing to playing poker in the World Series of Poker - now I revise that to playing chess against a computer that has no emotion!

It is for this reason that, with my book coming out last Friday on Amazon.com, I had originally written it as an alternative to MMFs, CDs, T-Bills - I now think it is also the best way to invest in stocks. Titled Zero (In)Tolerance, it sells for just under $15, and describes the strategy, with actual results, of how to obtain high returns without the appreciation (HOPE) and much of the risk (FEAR), by buying dividend stocks and selling call options 10% under the buy price, ensuring a safety net against most corrections - as in May of '09 and this past January. Please see more at : brentleonard.com

Last week's sentiment and breadth indicators, for what they're worth, show huge MMF redemptions, and a rare (albeit slight) inflow into domestic equities. This month's TSAA meeting in San Francisco is with Charles Biderman of TrimTabs - the guru on fund flows; it should be quite revealing. TA scored a coup in this week's Barron's Market Watch, with both Martin Pring and Tom McClellan writing advisory letters.

Tom's Oscillator went to a cautionary +75 last week, and the Adv/Dec was over 2700-400, with New His/Los at 743 to 6 . Also showing a warning are the Bullish %, a record AAII neutral reading, and the Nova/Ursa fund ratio.

Here are the stats:

MktSentiment

Last Week

Prev. Week

5 Yr HI

5 Yr LOW

DJIA:

10566

10325

14093

6626

Nasdaq:

2326

2238

2805

1114

S&P 500:

1138

1104

1561

683

CBOE Eq. put/call:

59

70

96-10/08

46-1/03

VIX:

17.4

19.5

90

8.8

McClellan Osc:

75

316

108

-100

McClellan Sum:

804

506

1568

-1514

Newsletter Surveys

InvestorsIntel.Bull:

42.1

41.1

63

22.21

InvestorsIntel.Bear:

22.7

23.3

54.4

16

AAII Bull:

35.9

34.9

n/a

n/a

AAII Bear:

26.2

29.5

n/a

n/a

Nova/Ursa Mutual Funds:

0.6

0.55

2.2

0.56

US Equity-1 week lag

n/a

151M

Money Market Flows

-1.6B

-37.7B

ETF equity:Monthly Totals

Jan.731B

Dec.777B

Baltic Dry Index:

3242

2707

11700

663

Bullish %:

76

71

88

2

Insider Corporate Sellers:

18:1

32:1

108:1

2.4:1

With record numbers of dollars coming out of Money Market Funds, mostly into the crowded trade of short term bonds, anyone who has a minimal knowledge of covered call options and/or an interest in hedging stock market exposure might want to check out: brentleonard.com for an alternative strategy that is low-risk as well as highly rewarding.For those of you wanting more details and actual trading results, a new book is available for $14.95 at Amazon.com: Zero (IN)Tolerance